I hear kids call someone gay all of the time here in San Diego. I don't hear adults do it too often.
Personally, I have developed the bad habit of saying that someone who looks ridiculous "looks like a homo.(which my macabre sense of humor finds hilarious)" I have tried to drop this except among select company, but it has slipped out a few times. Like the time I looked in the mirror and saw that I was having a bad hair day and I yelled "why didn't anyone tell me that my hair made me look like a homo?" with my cousin, who really is a homo standing right there. I turned red, but she thought it was hysterically funny, and she has called me "homo hair" ever since. She is cool like that.
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